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Article 4-1
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In the underwriting of securities on a firm commitment basis, except where prescribed by other laws and regulations, an underwriter shall act as prescribed by the following provisions with respect to the proportion of securities held for its own account; provided, however, that for any shares purchased for its own account that remain unsubscribed at the closure of the underwriting period, these restrictions shall not apply:
1. In an underwriting case involving cash capital increase, convertible corporate bonds, ordinary corporate bonds not handled by negotiated sale, financial bonds not handled by negotiated sale, and Taiwan depositary receipts for listed or over-the-counter (OTC) companies, the underwriter shall hold for its own account from 5 percent to 15 percent of the total number of units underwritten;
2. In the underwriting of a cash capital increase for a company that is neither listed nor OTC-traded, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten;
3. In an underwriting case involving preferred shares, preferred shares with warrants, or corporate bonds with warrants for public companies, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten;
4. In an underwriting case involving a secondary distribution of beneficial securities by a trustee institution or a secondary distribution of asset-backed securities by a special purpose company that is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten.
5. In an underwriting case where an offering of real estate asset trust beneficial securities by a trustee institution is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten.
In the underwriting cases contemplated under the preceding paragraph, for issues undertaken entirely by book building, each underwriter shall hold for its own account not more than 10 percent of the total number of units underwritten.
Where a public company carrying out a cash capital increase encounters waiver of subscription rights by an existing government-agency shareholder in accordance with the provisions of Article 267, paragraph 3 of the Company Act, and the authority with jurisdiction over such existing shareholder consents to incorporation of [the corresponding units] into the public underwriting, the portion thus incorporated into the public underwriting shall may be excluded when calculating the "total number of units underwritten" set out in paragraph 1, subparagraph 1.
In an underwriting case where an initial public offering (IPO) is carried out by a public company on the stock exchange or an OTC market, if the securities underwriter carries out the underwriting through public sale to outside parties, it shall first set aside 1,000 common shares from the offering for subscription by the Securities and Futures Investors Protection Center.
Except for underwriting cases involving an OTC company transferring its listing to a stock exchange, or for underwriting cases for which there are other acts and regulations that provide otherwise, if an underwriting case involving an initial listing of shares in common stock on a stock exchange or OTC market is carried out on a firm commitment basis, the lead underwriter shall stipulate with the issuing company that the issuing company is to coordinate with its shareholders to provide issued shares in common stock (the number thereof to be set at a certain percentage of the total volume of shares to be sold publicly to outside parties in the current underwriting case) to the lead underwriter for the purpose of exercising overallotment during the underwriting period. The related procedures shall be carried out in accordance with the Taiwan Securities Association Directions Governing the Underwriting Procedures to be Followed by Underwriters in Conducting an Initial Listing on a Stock Exchange or Over-the-Counter Market.
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Article 32
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Except when permission is granted by the competent authority for the securities industry, in an underwriting case involving the negotiated sale of ordinary corporate bonds or financial bonds, not more than 50 percent of the total number of securities shall be allocated to an individual subscriber. Not more than 20 percent of the total number of securities offered may be allocated to an individual subscriber in cases involving real estate asset trust beneficial securities, a secondary distribution of beneficial securities by a trustee institution, or a secondary distribution of asset-backed securities by a special-purpose company. In a case involving call (put) warrants or corporate bonds with warrants, not more than 10 percent of the total number of securities shall be allocated to an individual subscriber.
If the securities referred to in the preceding paragraph are divided into different classes for issuance, the total volume of an underwritten offering shall be calculated as the total volume of a given single class of securities after the issue has been separated into different tranches.
In an underwriting case conducted in accordance with the provisions of Article 31, paragraph 4, the number of shares actually allocated to any individual subscriber shall not exceed ten percent of the combined total of underwritten shares put up for sale in the current competitive auction the portion of the offering put up for public sale to outside parties plus shares allocated via overallotment; for a case handled in accordance with the provisions of Article 31, paragraph 5, the number of shares actually allocated to any individual subscriber shall not exceed ten percent of the total number of units put up for negotiated sale.
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